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INDIVIDUAL RETIREMENT ACCOUNTS

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If you haven't already done so, begin saving for retirement today; it's never too early! DFECU can help with an Individual Retirement Account (IRA). Tax benefits vary depending upon the type of IRA you establish, so be sure you check with your tax advisor for the advantages most beneficial for you.

Detroit Federal Employees Credit Union offers the following types of Individual Retirement Accounts:

VARIABLE RATE IRAS
To establish a DFECU Variable Rate IRA, an initial deposit of $100 is required. You can open a Variable Rate IRA and make regular deposits through payroll deduction, direct deposit, or in-person, and when the account balance reaches $500, you can transfer to a higher rate IRA certificate. Interest on a DFECU Variable Rate IRA is calculated based upon the daily balance, and is paid and compounded quarterly. A Variable Rate IRA can be established for a Traditional, Roth or Coverdell Educational IRA.
 
TRADITIONAL IRA CERTIFICATES
The minimum deposit necessary to establish a Traditional IRA Certificate is $1,000 for an eighteen month term, $1,000 for a three year term, and $500 for a five year term.
 
ROTH IRA CERTIFICATES
The minimum deposit necessary to establish a Roth IRA Certificate is $1,000 for an eighteen month term, $1,000 for a three year term, and $500 for a five year term. Roth IRAs are available to any member who has income from compensation, with no age restriction.
 
COVERDELL EDUCATIONAL IRA CERTIFICATES
The minimum deposit necessary to establish a Coverdell Educational IRA Certificate is $1,000 for an eighteen-month term, $1,000 for a three-year term, and $500 for a five-year term.

Interest on all IRA Certificates is calculated based upon the daily balance, and is paid and compounded quarterly. Once you open an IRA Certificate, the rate will remain in effect until maturity. (If your IRA Certificate is a "Certificate PLUS," you have the option to change the rate one time during the certificate term.) Your certificate will automatically renew for the same term and at the rate in effect at the renewal date, unless you contact us to redeem or change your certificate within seven days of maturity.

IRA Certificate rates offered are subject to change weekly.

BRIEF EXPLANATIONS OF THE FEATURES AND RESTRICTIONS ON IRAs

A traditional IRA is available to any member under age 70 1/2 who has income from compensation. The maximum contribution for 2002 through 2004 is $3,000 per year; the limit is $3,500 for taxpayers age 50 or older. Contributions to a Traditional IRA can be fully or partially tax deductible, based upon the income level of an individual or married couple. However, if the individual (or neither spouse) is not covered under another retirement plan, the entire IRA contribution to a Traditional IRA is tax deductible, regardless of the income level.

A Roth IRA is available to anyone with MAGI (modified adjusted gross income) below $110,000 (single) or $160,000 (joint). The maximum contribution for 2002 through 2004 is $3,000 per year; the limit is $3,500 for taxpayers age 50 or older. The maximum contribution amount is reduced if MAGI is above $95,000 (single) and $150,000 (joint). Contributions to Roth IRAs are not tax deductible, but withdrawals, including earnings, are tax-free if the account is open for five years and withdrawn for a qualified reason (age 59½, a first time home purchase, disability, or death). Any contributions to a traditional IRA reduce the allowable contributions to a Roth IRA.

Coverdell Educational IRAs are intended solely for children under the age of 18 for whom the funds will be used to pay for qualified educational expenses. Contributions to Educational IRAs are nondeductible and the income limits are identical to those for Roth IRAs. There is a maximum contribution of $2,000 per child per year, in addition to up to $3,000 that may be made in other IRA contributions for any tax year.

For more details about IRAs please ask the credit union for a brochure, or visit this Internal Revenue Service web page for Publication 590.

Your savings are insured up to $100,000 by the National Credit Union Administration, a U.S. Government Agency.